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Nigeria is no longer the preferred destination for oil exploration in Africa, the Managing Director\Chief Executive, Total Upstream Company in Nigeria, Elisabeth Proust, has said.

Proust attributed this to stiff competition from East Africa with large volumes of gas discovered in Mozambique, Tanzania, Kenya and Angola.

According to her, these countries have rolled out attractive terms and incentives designed to encourage exploration.

She stressed the need for aggressive exploration activities to replace reserves and develop exploitation projects.

She stated: "I believe all stakeholders recognise the urgent need to replace production in Nigeria. The level of drilling activity in Nigeria and the reserve replacement ratio of drilling activity in Nigeria and the reserves replacement ratio of the country are extremely low right now.

"For Nigeria's oil and gas reserves to grow and for companies to invest in exploration and development of assets, there must be a clear, fair and stable and regulatory regime that allows long term planning and investing".

She called for an urgent need to encourage aggressive exploration for oil and gas to replace reserves and develop exploitation projects. "For example, there are considerable unexplored frontier basins in the deeply buried onshore, offshore and ultra-deep offshore Niger Delta of over 50 billion barrels of oil equivalent and about 10-15 billion barrels of oil equivalent in the Lagos abrupt margin and upper Benue trough. In the current situation, there is need for the government authorities to be creative on incentives for exploration. Otherwise reserves replacement and production will continue to decline", she added.

Proust disclosed that the company has been in Nigeria for over 50 years in all the sectors - upstream, midstream and downstream.

According to her, in Nigeria, the upstream activities of the Total Group are carried out primarily through Total E&P Nigeria Limited, the operator of the Nigerian National Petroleum Corporation (NNPC/TEPNG Joint Venture, and Total Upstream Nigeria Limited, which developed the Akpo field and has now launched the Egina project, both in OML 130.

"The Total Group is also active in the commercialisation of Nigerian gas through our 15 per cent interest in Nigeria LNG Limited and our 17 per cent interest in Brass LNG Limited. We are also building two major pipelines, the 50km Northern Option Pipe Line and the 45km pipeline traversing Obite, Ubeta and Rumuji. These pipelines will enable the company to remain as key players in the supply of gas to both the domestic and export markets".

She disclosed that the company has just created a new energies entity in Nigeria to show its seriousness about its commitment to energy, particularly in Solar where, she said, the company has taken a 65 per cent interest in SunPower, the world's second-largest solar energy company.


Nigeria is in talks with eight oil companies, including Shell and ExxonMobil, for new sales purchase agreements for the supply of a total of 1.09 Bcf/d of gas to 10 power plants in the country, government officials said Thursday.

The power plants were built to tackle chronic energy supplies in the country.

The non-availability of gas had stalled plans by Nigeria to conclude the sale of the power plants previously set for the third quarter, a spokesman for the state privatization agency Bureau of Enterprises said.

"The Ministry of Petroleum Resources, Ministry of Power and the Niger Delta Power Holding Company are currently negotiating new gas sales and purchase agreement with eight suppliers," an official close to the deal said.

"When these agreements are concluded, it will go a long way to solving the problem of availability of gas to the independent power plants the government has just built and preparing to privatize."

Other companies in negotiations with the government for gas deals are the US' Chevron, France's Total, Italy's Eni, local companies Seplat and Seven Energy as well as state-run Nigerian Petroleum Development Company.

Officials said Nigeria wants to agree a new deal with Shell, the country's biggest oil producer, to supply a total of 175,000 Mcf/d of gas to the power plants, while ExxonMobil is expected to supply 150,000 Mcf/d of gas.

Chevron is expected to supply 115,000 Mcf/d of gas, Total 100,000 Mcf/d, Eni 110,000 Mcf/d, Seplat 140,000 Mcf/d and NPDC 185,000 Mcf/d.

Nigeria is hoping to use the newly approved domestic gas price of $2.50/1,000 Mcf to convince the companies to agree to the deals, another official said, with hopes the talks could be concluded before the year end.

The new power plants, located in Nigeria's Niger Delta and Southwest regions, have a total nameplate capacity of over 5 GW.

Nigeria early this year shortlisted 42 companies to bid for the 10 gas-fired plants, coming in the wake of the successful transfer of most of the country's power generation and distribution to the private sector late last year.

Joe Anicheb, spokesman for the state privatization agency BPE, told Platts Thursday that the sale of the 10 plants had been put on hold pending conclusion of the gas sales and purchase agreements with oil companies.

"What has happened is that the bidders are afraid banks will not lend them money if they can't get gas to operate the plants. The privatization process will resume when the gas companies can guarantee gas supply to the power plants," he said.

"But I can confirm that the consultations are ongoing and the gas supply issues will soon be resolved."

Nigeria is home to the world's ninth biggest gas reserves, with about 182 Tcf of proven gas, according to data provided by state oil firm Nigerian National Petroleum Corp. But it has been struggling to meet its domestic gas requirements particularly in the power sector.

Gas supplies have been constrained by low gas prices set by the government, which barely cover the cost of producing and processing gas, let alone investing in gas infrastructure where they can control both the demand end and supply end of the value chain and obtain better prices, according to industry analysts.

There is currently a shortfall of 750,000 Mcf/d of gas supply to the power sector, according to NNPC data released last month, due to a lack of investment to explore for gas and infrastructure to meet rising demand.


News & Happenings / Oil Slide Puts Pressure on Nigeria, Others
« on: November 13, 2014, 12:15:53 PM »
The sharpest drop in oil prices since 2008, in addition to a surge in the dollar, are testing the resolve of energy-producing nations like Nigeria to defend their currency pegs.

Even Saudi Arabia, whose $745 billion reserves may allow it to maintain the link for years, is feeling the pressure of speculators betting against its currency. Nigeria intervened in foreign-exchange markets to bring the naira back from a record low last week, while economists surveyed by Bloomberg expect Venezuela to capitulate on its dollar peg by year-end.

For the dwindling number of nations whose exchange rates are linked to either dollars or a basket of major currencies, breaking those ties would raise the odds of inflation accelerating too fast. It would also take away a steadying influence on their economies.

“Countries operating with a currency peg, particularly oil exporters, are suffering from losing export earnings, weakening their ability to defend the peg at a time when emerging-market currencies are under pressure from a stronger dollar,” the chief economist at London-based frontier- markets specialist Exotix Limited, Stuart Culverhouse said.
“It magnifies the problems they’re having.”

Oil and natural gas account for at least 85 percent of the exports of Saudi Arabia, Nigeria and Venezuela, while Russian energy sales account for more than half the government’s revenue, according to the United State Energy Information Administration.

Though it didn’t have a formal peg, Russia, the world’s largest energy exporter, this week ended a policy of maintaining the ruble in a fixed band versus a basket of dollars and euros.

Crude oil fell almost 30 per cent since mid-June to a three- year low of $75.84 per barrel last week, according to generic prices in New York compiled by Bloomberg.

At the same time, the dollar is soaring on the prospect of higher US interest rates. Bloomberg’s Dollar Spot Index, which tracks the greenback against 10 major peers, rose nine per cent since June.

Nigeria may need to devalue the naira after presidential elections in February, Goldman Sachs Group Inc. said in a Nov. 3 report. Policy makers target a rate for the naira at twice- weekly auctions of 155 per dollar, plus or minus three per cent.

In defending the fixed-exchange rate, Africa’s largest oil producer has reduced its foreign-currency reserves to a four- month low of $38 billion. The naira weakened to a record N172.78 per dollar on November 7 before intervention helped it rebound. Even so, it’s fallen for the past three days on concern Nigeria’s central bank will no longer be able to defend the peg, and was at N169.25.

Those concerns led Phillip Blackwood, a money manager at EM Quest Capital LLP in London, to sell his holdings of Nigerian domestic bonds in recent weeks.

“There’s so much pressure,” Blackwood, who manages $3.3 billion of emerging-market assets.

“They’re not willing to defend. It costs too much.”
Spokesman for the Central Bank of Nigeria, Ibrahim Mu’azu said no decision has been taken on whether to devalue.


The Managing Director and the Chief Officer of Total Upstream Companies of  Nigeria Mrs. Elizabeth  Proust has called for aggressive exploration and drilling activities  as part of the deliberate agenda to boost Nigeria’s  declining crude oil reserve which  has dropped from 40 billion to 35 billion barrels  at the end of third quarter of 2014.

Total Nigeria boss who spoke in Lagos yesterday at the ongoing 32nd edition of National Association of Petroleum Explorationist ( NAPE)  urged geologists and  petroleum engineers in the country to explore and develop unexplored frontier basins in Onshore, Offshore  and Ultra Deep Offshore in  Niger Delta Region. These contain over 50 billion of oil equivalent and another 10-  15 billion barrels of oil  equivalent located in Lagos and  Upper Benue Trough  basins .

According to her, Nigeria is no longer the preferred destination   for exploration in Africa as there  are  stiff competition from East Africa with large volumes of oil and gas  discovered in Mozambique , Tanzania, Kenya and  Angola, amongst others.

‘’I believe that all stakeholders recognize the urgent need to replace depleted  production In Nigeria. The level of  drilling activities in the country is low, as the reserves  replacement is extremely low right now  when compared with the development of the discovered reserves . There is the need to encourage aggressive exploration  as part of the action to boost Nigeria’s  declining crude reserves,’’  she stated.


Oando Energy Resources Inc. ("OER" or the "Company") (OER), a company focused on oil and gas exploration and production in Nigeria, today announced financial and operating results for the three and nine month periods ended September 30, 2014. The unaudited financial statements, notes and management's discussion and analysis pertaining to the period are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and by visiting www.oandoenergyresources.com. All monetary figures reported herein are U.S dollars unless otherwise stated.

"At the end of July we completed the transformational acquisition of the Nigerian Upstream business of ConocoPhillips Company ("COP"), that substantially grew our production, reserves, resources and cashflow, which will allow us exploit a broader suite of assets and new growth opportunities both onshore and offshore Nigeria," said Pade Durotoye, CEO of Oando Energy Resources Inc. "In the third quarter we saw an immediate and significant impact on revenue with only a partial two months of production contribution from the assets acquired in the ConocoPhillips transaction. We also took steps to strengthen our balance sheet with the conversion to equity of more than $315 million in principal, interest and fees payable under the $1.2 billion facility agreement."

Recent Operational Highlights

 -- On July 30, 2014, completed the acquisition of COP (the "Acquisition Assets") for a total cash consideration of $1.5 billion. The Corporation is now positioned as one of the leading E&P players in the Nigerian Oil & Gas sector, with Proved plus Probable Reserves of 230.6 MMboe, Best Estimate Contingent Resources of 536.8 MMboe, Unrisked Best Prospective Resources of 2,051.8 MMboe as at December, 2013 and total production of approximately 51,400 boe/day at the end of the third quarter, 2014. -- Achieved total production of 4.1 million boe in the nine months and 3.2 million boe in the three months periods ended September 30, 2014 compared with 1.1 million boe and 363,000 boe in the comparative periods ended September 2013, respectively. The increase was primarily due to the Company's newly acquired working interest in OML 60 - 63 which contributed 2.9 million boe of production over the 62-day period from July 30 to September 30, 2014. -- During the Quarter, the Company and its partners completed the construction of the 45,000bbls/d Umugini pipeline project and commenced final testing in readiness for commercial injection into the pipeline.
Financial Highlights

 US$'000, except per share data Three months ended Nine months ended September 30, September 30, 2014 2013 2014 2013 Financial: Revenue 184,777 37,461 247,380 103,235 Cash flows from operating activities 64,131 848 52,911 (21,323) Comprehensive income/(loss) 89,541 12,371 (88,008) 2,778 Net income/ (loss) per share: Basic 0.12 0.12 (0.16) 0.03 Net income/ (loss) per share: Diluted (1) 0.12 0.12 (0.16) 0.03 Total assets(2) 3,693,880 1,299,422 3,484,397 1,299,422 Total non-current liabilities(2) 1,523,019 275,195 1,313,537 275,195 Operational: Production (3) Oil (bbl) (4) 1,270,183 363,032 2,091,970 1,050,789 NGL (boe) (5) 182,632 - 182,632 - Natural Gas (mcf) 10,772,054 - 10,772,054 - Total production (boe)(5) 3,248,158 363,032 4,069,944 1,050,789 Boe/day - Legacy assets (6) 3,524 3,946 4,198 3,849 Boe/day - Acquisition assets(6) 31,783 - 10,711 - Gross realized prices (7) Oil ($/bbl) 104.62 111.62 96.64. 105.77 NGL ($/boe) 13.11 - 13.11 - Natural gas ($/mcf) 2.47 - 2.47 - Net realized prices (8) Oil ($/bbl) 99.26 103.19 96.20 98.25 NGL ($/boe) 12.19 - 12.19 - Natural gas ($/mcf) 2.30 - 2.30 -
 (1) In determining the diluted EPS of the Corporation in 2014 and 2013, the impact of the warrants, the stock based compensation and the convertible loan have not been considered for the nine month period as their impact is antidilutive. For the three month period dilutive instruments have been considered - Refer to note 13 in the Interim Financial Statements. (2) Prior year comparatives are as at December 31, 2013. (3) Barrels abbreviated to "bbl", barrels of oil equivalent abbreviated to "boe", thousand cubic feet abbreviated to "mcf". (4) The Corporation consolidates 45% revenue of Ebendo (OML56) which is Oando Production and Development Company ("OPDC") ownership interest in the field and recognises a minority interest of 5% in OPDC. (5) Natural gas volumes have been converted to boe using a conversion ratio of six mcf of natural gas to one boe; "NGL" refers to natural gas liquids. (6) Legacy assets production; means production from OML 125 and OML 56 for the three and nine months ended September 30, 2014; Acquisition assets production means production from OML 60 to 63 for the period July 30, 2014 to September 30, 2014 which were acquired through the COP Acquisition. The actual average daily production for that period was 47,934 boe/day. However for the table above, ninety two calendar days and two hundred and seventy three calendar days have been utilised for the calculation of total production boe/day for the three and nine months ended September 30, 2014 and 2013 respectively. (7) Gross Realized prices are before royalties, the Nigerian Government share of profit oil, crude oil losses and unrecognised revenues related to excessive NNPC lifting's at OML 125. (8) Net Realized prices are after royalties, the Nigerian Government share of profit oil, crude oil losses but before unrecognised revenues related to excessive NNPC lifting's at OML 125. After considering unrecognized revenues related to excessive NNPC liftings at OML 125 the net realized price for oil is $89.72/bbl for the nine months ended September 30, 2014.
 -- Revenue, net of royalties, for the three and nine month periods ended September 30, 2014 increased by $147.3 million and $144.2 million, respectively. The increase in both periods was due primarily to $152.8 million of revenue earned between July 30 and September 30, 2014 from the Acquisition Assets of which $145.4 million related to the sale of oil, gas, and Natural Gas Liquids ("NGL"), $6.3 million related to the sale of power generated by the Kwale-Okpai power plant, and $1.1 million related to crude transportation tariffs. The Legacy Assets revenue for the nine month period ended September, 2014 declined by $5.5 million in comparison to the same period in 2013. -- Production for the three and nine month periods ended September 30, 2014 was 3.2MMboe and 4.1MMboe, respectively; this represents an increase from the three and nine month periods ended September 30, 2013 of 2.8 MMboe and 3.0 MMboe, respectively. The increase in both periods was primarily due to 2.9 MMboe or 47,934 boe/day of production between July 30 and September 30, 2014 from the Acquisition Assets which attributed 15,508 bbl/day of oil, 2,994 boe/day of NGL, and 29,432 boe/day (or 176,591 mcf/day) of gas. -- Financial commodity contracts were executed in August 2014 which hedged (a) 8,000 bbl/day of oil production at $97/bbl until July 2017 (unless the market price exceeds $110.55/bbl; the Corporation will receive the incremental price above $110.55/bbl) and (b) an average of 2,223 bbl/day of oil production at an average price of $91/bbl until January 2019 (unless the market price exceeds cap prices ranging from $95/bbl to $115/bbl; the Corporation will receive the incremental price above the cap price). This equates to approximately 52% of total oil production being hedged. In the three and nine months ended September 30, 2014, the Corporation recorded derivative gains of $33.2 million on these hedges. -- Production expenses for the three and nine month periods ended September 30, 2014 increased by $63.4 million and $66.2 million, respectively. The increase in both periods was due primarily to $67.1 million of production expenses from the Acquisition Assets between July 30 and September 30, 2014 of which $38.6 million related to non-recurring acquisition accounting fair value adjustments. Excluding fair value adjustments, net production expenses on Acquisition Assets were $28.5 million or $9.75/boe. -- General and administrative costs ("G&A costs") for the three and nine month periods ended September 30, 2014 increased by $66.3 million and $101.0 million, respectively. The $66.3 million increase in the three month period was driven primarily by a non-recurring $41.2 million ministerial consent fee levied by the Nigerian government due to the COP Acquisition and $17.5 million of non-recurring COP Acquisition related expenses. The $101.0 million increase in the nine month period was driven primarily by the $41.2 million non-recurring ministerial consent fee, $45.8 million of non-recurring COP Acquisition related expenses, and a $14.0 million increase in staff and other G&A costs. -- Depletion, depreciation, and amortization ("DD&A") for the three and nine month periods ended September 30, 2014 increased by $34.7 million and $39.9 million, respectively. The increase in both periods was due primarily to $27.8 million of DD&A incurred between July 30 and September 30, 2014 from the Acquisition Assets. -- From July 30 to September 30, 2014, the Acquisition Assets contributed $57.9 million to net income before taxes based on $152.8 million in revenue, $67.1 million of production expenses, and $27.8 million in DD&A; excluding the impact of acquisition accounting fair value adjustments of $28.5 million as described above, the Acquisition Assets contributed $86.4 million to net income before taxes in this period. -- For the nine months ended September 30, 2014, the Company had a net loss of $88.0 million, a working capital deficiency of $507.9 million, and for the nine months ended September 30, 2014, the Company had a net loss of $88.0 million and a working capital deficiency of $591.4 million. Oando has incurred significant levels of debt financing for which specific debt covenants must be satisfied. The Company has taken measures to improve liquidity including converting borrowings to equity and obtaining equity financing and has benefited from increased cash flow from the assets acquired on the COP Acquisition. -- For the nine months ended September 30, 2014, the Corporation exercised the conversion option on borrowing agreements with Oando PLC which resulted in the settlement of Principal of $867 million, outstanding interest of $15 million and financing fees of $48 million, all amounting to $929 million, to 650,786,739 shares in the Company and also issued 325,392,870 warrants to Oando PLC. -- For the nine months ended September 30, 2014 cash flow from operating activities was $52.9 million compared to a $21.3 million cash outflow in the comparative period. The increase of $74.2 million was driven primarily by increased cash flow from the Acquisition Assets.
Selected Quarterly Results

 US$'000, except production per share data For the three months ended September 30, June 30, March 31, December 31, 2014 2014 2014 2013 Production 3,248,158 413,985 407,802 406,029 (boe) Total Revenue 184,777 30,440 32,163 23,976 Net Income 89,541 (137,668) (39,881) (41,008) for the Period Earnings Per 0.12 (0.24) (0.14) (0.32) Share Diluted 0.12 (0.24) (0.14) (0.32) Earnings Per Share Capital 52,910 24,355 42,550 45,573 Expenditures Total Assets 3,693,880 1,662,142 1,689,937 1,299,422 Total 1,523,019 245,925 274,812 275,195 Non-Current Liabilities For the three months ended September 30 June 30, March 31, December 31, 2013 2013 2013 2012 Production 363,032 353,145 334,612 326,819 (boe) Total Revenue 37,461 36,072 30,699 27,746 Net Income 11,645 (1,167) (7,187) (9,625) for the Year Earnings Per 0.12 (0.01) (0.07) (0.09) Share Diluted 0.12 (0.01) (0.07) (0.09) Earnings Per Share Capital 29,684 36,353 8,345 37,752 Expenditures Total Assets 1,223,808 1,193,585 1,079,899 1,127,050 Total 206,150 207,981 156,457 177,699 Non-Current Liabilities
The Corporation's quarterly financial information can be significantly impacted by fluctuations in commodity prices, production volumes, and interest rates. Refer to the relevant sections of the MD&A for discussions of the results for the three and nine months ended September 30, 2014 and the MD&A for the year ended December 31, 2013.


OML 60-63, OML 131 ("Acquisition Assets")

From July 30 to September 30, 2014, average production of 47,934 boe/d for 62 days and capital expenditures on Acquisition Asset fields were $25.3 million. In this period, $19 million was spent on the Ogbogene NE and Ogbainbiri Deep C projects, and $6.3 million was spent on other capital projects. The Corporation's share of NAOC JV budgeted costs for Q4 2014 is estimated to be $28.6 million.

OML 125 (Abo Field)

Budgeted capital expenditures for OML 125 for the nine months ended September 30, 2014 were $33.3 million. The Company incurred $66.3 million of capital expenditures in this period, which is attributable to Abo 3, Abo 8, and Abo 12 drilling and completion activities. Capital expenditures on Abo 3 were $41.8 million, which is the main driver of the over budget amount due to increased completion costs. Expenditures on Abo 8 and Abo 12 were $3.9 million and $20.6 million, respectively.

OML 56 (Ebendo Field)

Budgeted capital expenditures for OML 56 for the nine months ended September 30, 2014 was $16.5 million. The Company incurred $9.9 million on construction of the Umugini pipeline, Ebendo Well 7 drilling and completion activities, and flow station construction. The Ebendo Well 7 was successfully drilled and completed with the expectation that it will be connected to Umugini pipeline in Q4 2014.

OML 13 (Qua Ibo Field)

Budgeted capital expenditures for OML 13 were set at $40.6 million for 2014. In the nine months ended September 30, 2014, the Company incurred capital expenditures of about $11.5 million on pipeline and facility costs as well as flow station construction. Oil production from the Qua Ibo Field's C4 and D5 reservoirs are expected to commence in the fourth quarter of 2014 after the commissioning of a crude processing facility which will be completed in the fourth quarter of 2014.

OML 134 (Oberan Field)

Budgeted capital expenditures for OML 134 were set at $7.4 million for 2014. In the nine months ended September 30, 2014, the Company paid $6.1 million of the costs incurred on exploratory activities related to the Mindiogboro prospect. Based on results from the drilling of the exploration well into the Mindiogboro prospect, the Company plans to continue geological, geophysical, and environmental studies in 2015.


Oil production from the Organization of the Petroleum Exporting Countries (OPEC) fell by 300,000 barrels per day (b/d) to 30.3 million b/d in October from 30.6 million b/d in September as supply from Saudi Arabia, Iraq and Nigeria dropped back, according to the just-released Platts survey of OPEC and oil industry officials and analysts.

Kingpin producer Saudi Arabia accounted for 150,000 b/d of a total 380,000 b/d decline that was partly offset by an 80,000 b/d increase in Libyan supply. Iraqi and Nigerian volumes fell by 90,000 b/d and 70,000 b/d respectively.

Libya's average production of 860,000 b/d was the highest monthly volume since July 2013, when output averaged 1 million b/d. But the month-over-month increase, although marking the latest increment in a steady monthly climb from as little as 200,000 b/d in May, comes amid the North African country's increasing political strife, which is feeding into the oil sector. Earlier Tuesday, a source with close ties to the National Oil Corporation said production was currently running at around 540,000 b/d after falling back from around 1 million b/d at the end of October.

"Just as Platts reports a drop in OPEC production, easing up on what looked to be significant oversupply relative to world demand, there are new reports of a sharp slowdown in Libyan output, just this month," said John Kingston, Platts global director of news. "That sort of volatility creates a significant wild card as OPEC heads to its meeting at the end of November: with one country in position to be responsible for short-term increases or decreases measured in the thousands of barrels per day. Planning in that atmosphere becomes almost impossible."

The October total, which leaves OPEC overproducing its 30 million b/d output ceiling by just 300,000 b/d, is some 900,000 b/d above OPEC's most recent forecast of demand for its crude in the first quarter of 2015. In its most recent monthly oil market report, OPEC forecast that the call on its crude would fall from 30.15 million b/d in the current quarter to just 28.4 million b/d in the first three months of 2015. For 2015 as a whole, OPEC expects demand for its crude to average 29.5 million b/d.

On Monday, Kuwaiti oil minister Ali al-Omair said he did not expect OPEC to cut output at its November 27 meeting in Vienna.

There has been no word from Saudi Arabia on the upcoming meeting, which takes place just three days after the deadline for nuclear talks between Iran and six world powers to produce an agreement that would lead to the removal of sanctions on Tehran and an eventual return to world oil markets of more than 1 million b/d of Iranian crude exports.

"Even if a nuclear deal with Iran is reached, it's not likely the market will see new Iranian crude in the short term," noted Kingston. "But the prospect of increased flows from Iran at some point in 2015 could arise at the meeting."

Saudi oil minister Ali Naimi has not spoken publicly about oil prices since September 11, when he said prices went up and down all the time and that he didn't know what the "big fuss" was about. During that week, Brent crude oil prices dipped below $100 per barrel (/b) for the first time since June 2013.

Early on November 11, Brent crude traded at $81.23/b, its lowest level since October 20, 2010.

For output numbers by country, click here. You may be prompted for a cost-free, one-time-only log-in registration. For the latest OPEC news features, visit this OPEC Features link and for an OPEC guide, access this link: http://www.platts.com/news-feature/2014/oil/opec-guide/index.

President Goodluck Jonathan on Monday charged oil-producing countries to, as a matter of urgency, cooperate more and work together to overcome the current challenge of falling crude oil prices.

The president spoke when he had a meeting with the new Angolan Ambassador to Nigeria, Mr. Eustaquio Janeiero Quibato.

According to Jonathan, it has become imperative for African oil producing countries to come together and strategise on the best ways of protecting their domestic economies from the vagaries of fluctuating oil prices.

"We are blessed with oil and we must continue to do all that we possibly can to maximise its benefits for our countries and the African continent," Jonathan said.

He stressed that Nigeria and Angola always had cordial bilateral relations. Jonathan however canvassed for expansion of trade, economic, cultural and political cooperation between the two countries.

"For years, we have had a solid relationship. Historically, we have been together. So Nigeria and Angola should also work with greater synergy at continental and global fora," the president noted.

At another separate meeting with new Hungarian Ambassador to Nigeria, Dr. Ternak Gabor, Jonathan called for greater international support and assistance for the West African countries plagued by the Ebola Virus Disease.

Jonathan also received Letters of Credence from the new Ambassador of Burundi to Nigeria Mr. Mathias Haranungarawe and the new Serbia in, Ambassador to Nigeria, Prof. Jovan Maric.

The president wished all the new ambassadors very successful tenures in Nigeria. Jonathan assured them that they would get full cooperation of the federal government, as they work to enhance bilateral relations between their countries and Nigeria.


United Kindom-listed Afren Plc has stated that it targets first oil from the Okoro Further Field Development, Aje and Okwok oilfields offshore Nigeria in 2015.

In its interim management statement and financial results for the nine months ended 30 September 2014 and an update on its operations year-to-date 2014, which was released recently in accordance with the reporting requirements of the EU Transparency Directive, the company said the Final Investment Decision sanctioned on Okoro Further Field Development and Aje would be sealed in the fourth quarter of 2014.

According to the statement, the installation of the Ebok Central Fault Block Extension platform is expected in Q4 2014; while batch drilling on Ebok North Fault Block is underway.

The statement added that the Wellhead jacket fabricated at Okwok would be installed in Q4 2014.

Key highlights of the results showed that the average net production for the nine months to 30 September 2014 at 31,377 barrels of oil equivalent per day (bopd), with full year 2014 net production guidance range (excluding Barda Rash) maintained at between 32,000 to 36,000 bopd with new incremental production wells now on-stream

The results also showed that profit after tax of $167 million, compared to $129 million in Q3 2013 reflected tax exemption at Ebok offsetting reduction in pre-tax profit and revenue.

Afren noted that the balance sheet remains strong with net assets of $1,981 million

The company also stated that drilling campaign was underway on OML 26, with drilling ongoing on the second producer with a third producer to spud in late 2014.

Commenting on the results the Interim Chief Executive Officer of the company, Mr. Toby Hayward, said the company’s board was pleased to have received the results of the independent review by Willkie Farr and Gallagher (UK) LLP (WFG), adding that the board is in the process of implementing its recommendations.

“Management remains focused on operational performance, having made good progress on our core development projects in Nigeria, which are expected to drive significant growth in production and cash flow in the medium-term. We are moving forward with our play-opening discovery at Ogo, while we continue to de-risk an exciting set of exploration opportunities across our portfolio,” he added.

Afren delivered average net production (excluding Barda Rash) in the period to 30 September 2014 of 31,147 bopd, compared to 48,305 bopd in Q3 2013 and below the company’s full year production guidance range of between 32,000 to 36,000 bopd.

“This was principally due to the on-going delays with the installation of the Ebok Central Fault Block (CFB) extension due to adverse weather conditions and additional downtime at OML 26 in July, as a result of repair work by SPDC on the Trans Forcados pipeline. With new incremental production wells now on-stream and close to completion across all of our existing producing assets in Nigeria, the Company remains on-track to achieve full year net production at the lower end of guidance of between 32,000 to 36,000 bopd,” the statement explained.

At the Ebok field, the company said gross production averaged 27,277 bopd during the period.

However, adverse weather conditions have delayed the installation of the CFB extension platform and the planned three producers targeting additional reservoirs in the CFB.

According to the company, the installation of the CFB extension platform is now expected to complete in Q4 as soon as the weather conditions permit.


Aveon Offshore Limited, a Nigerian oil & gas engineering and fabrication company, has been awarded a contract by National Oilwell Varco (NOV) Nigeria for the fabrication of Egina offloading buoy as part of the package for the Egina OLT contract for Total Upstream Nigeria.

The contract which was awarded in March 2014 for the fabrication of a 900 ton offloading buoy includes the fabrication of the 700 ton buoy hull, installation and integration of a 200 ton turret and the launching and pre-commissioning of the completed buoy.

Capital expenditure for the construction of a slipway for the launching of the buoy is also included in the contract.

“This contract enables Aveon to expand the breadth of its offering to the Nigerian Oil and Gas industry. It also demonstrates the confidence of our clients in our capacity and capability to deliver on schedule the components of this major project. We plan to exceed their expectations” says Tein George, Chairman, Aveon Offshore Limited.

The project will be executed at the Aveon Offshore’s 240,000sqm fabrication yard in Rumuolumeni near Port Harcourt and is expected to generate up to 250,000 man hours. The Sail Away of the buoy is scheduled for the second quarter of 2017.


News & Happenings / Can CBN save the Naira?
« on: November 10, 2014, 09:50:27 AM »

There are genuine public concerns that with the receding sales price of crude oil in the international market, in recent months, our heavy dependence on oil revenue may diminish any promising prospect for inclusive economic growth in Nigeria.

Although, sluggish economic growth in Europe and China and the rapid development of shale oil, together with increasing sources of crude oil supplies, have all combined to bring down crude oil prices, however, the precipitate price fall within the last four months, may, according to seasoned analysts, also be the result of the desperate auctions of crude oil at ridiculously low prices by successful warlords in strife torn nations in North Africa and the middle East. The regular theft of between 10-20% of Nigeria’s annual crude output are probably also sold cheaply as goods which allegedly fell off the proverbial back of a lorry.

Ultimately, the world community will become the real losers as such revenue accruals are deployed by contending warlords to purchase of weapons and critical support for terrorists and insurgents who seek to destabilise domestic and international security in the same manner that illicit funds from fraud, narcotics and human trafficking also adversely influence capital flows and the world economy.

Indeed, if the current trend persists, and insurgency in oil producing nations also remain uncaged, crude oil price may actually fall below $50/barrel as in 2008, and wipe off over half of Nigerian’s current budget revenue expectations. In such event, there will be a revenue shortfall of about N1tn which is normally allocated for capital expenditure in annual budgets; government may consequently become forced also to trim down its unpopular and insensitive recurrent budgets.

In reality, workers’ lay off will not be a welcome solution to revenue shortfalls as this may create industrial strife and make government more unpopular; furthermore, the National Assembly will also be reluctant to endorse any budget proposal that would reduce the huge, inappropriate income expectations, allowances, and slush funds to which Legislators and privileged civil servants have become accustomed.

Thus, both Legislators and civil servants will seek to maintain their existing income levels if possible; nevertheless, government may acquire additional loans because of revenue shortfalls to fund its budget at existing levels; however, the accumulation of such loans could horrendously increase current annual debt service charges from about N600bn to closer to N1tn or over 20% of budget. Regrettably, in such event, government and its agencies will seek to borrow from external sources because of the attendant cheaper cost of such funds below 7%! There will however be problems between national sovereignty and the selfish dictates of powerful external creditors to contend with if we became heavily dependent on External loans!

Alternatively, government may decide to make up for revenue shortfalls from crude oil by devaluing the Naira; in other words, where each state for example got N160m allocation for $1m dollar revenue, each state would now get N200bn for the same export revenue, if the Naira exchange rate became officially devalued, to say, N200=$1.

Unfortunately, such a weaker Naira exchange rate will immediately increase manufacturing costs by over 20% and make made in Nigeria goods uncompetitive, against, often subsidised imports. Ultimately, Nigeria’s industrial landscape will further contract as was the case after the oppressive devaluation of Babangida’s administration.

Naira devaluation will also instigate, higher production costs which will drive higher prices across the board for most goods and services; regrettably however, income earners, particularly the majority who currently live on less than $2/day will also become poorer as their N18,000 minimum wage will buy less and less goods and services from the market.

Although, salaries and allowances of Legislators and public servants may remain the same, in nominal terms after devaluation, however, in real terms, the total income package will still not command the erstwhile purchasing value; in effect, both the rich and the poor will become relatively poorer!

Worse still, further Naira devaluation will make it exceedingly difficult for us to avoid the wasteful payment of over $7bn on fuel subsidy annually; expectedly, the domestic fuel price will also shoot up to about N200/litre without subsidy; however it is, debatable whether the public would acquiesce to 100% increase on petrol.

Nevertheless, the fiscal pressure to devalue the Naira is also propelled on the monetary front; market apprehension about Naira stability has increased the demand for the dollar as a safer store of value than the Naira; furthermore, political tensions and increasing rate of insecurity prior to the 2015 elections, particularly in the light of the predicted breakup of our country, may also move funds away from the Naira; current market indicators suggest a stampede by foreign portfolio investors to offload their Naira holdings and repatriate their funds in foreign currency.

In reality, the Naira exchange rate is also eternally challenged by the constant excess of Naira liquidity pitched against CBN’s monopoly of the forex market and the rationed dollar supplies to the market.

Unfortunately, rather than address and control the real cause of the destabilising, ever present excess Naira supply, the CBN has failed with its strategies to restrain dollar demand and maintain a stable official exchange rate of about N155=$1 for about 5 years. Inspite of the fact that Bureau De Change (BDCs) constitute the prime sources of forex funding for laundered money and smuggling of those goods which constrain the growth of domestic industry, the CBN misguidedly, officially allocated billions of dollars to BDCs annually in order to support its fixed exchange rate.

Although, this extremely liberal disposition to BDCs has been reviewed by significantly increasing the mandatory capitalisation, the Apex Bank has also reduced BDC weekly forex allocations; furthermore, last week, the CBN also stopped direct sales of dollars to Importers of electronics, Generators, Information Technology and Telecom equipment; such importers would henceforth source their dollars from the interbank market at a higher exchange rate of over 5% for now.

Expectedly, the above measures will only drive forex demand into the black market and ultimately recreate the same multiple exchange rates structure that was condemned in the past and also further widen the margin between official and black market exchange rates; increased rent seeking would inevitably also increase and distort economic activities in the same manner that funds from human trafficking and illicit narcotics trade threaten to destabilise the world’s economy.

Instructively, however, the most plausible approach to save the Naira exchange rate will be to stop CBN’s monopoly of the forex market and the attendant usual substitution of fresh Naira supply for monthly allocations of dollar revenue.

- See more at: http://www.vanguardngr.com/2014/11/can-cbn-save-naira/?#sthash.5D5P7gZT.dpuf

News & Happenings / Instability threatening Nigeria's oil economy
« on: November 10, 2014, 09:48:29 AM »
Nigeria is Africa's second largest economy with a GDP growth rate of seven per cent, but with rising militancy in the Niger Delta and insecurity, the country has seen an increase in the number of multinationals who are choosing to set up shop elsewhere in more stable climates.

NIGER DELTA: International oil companies drilling in the Niger Delta have faced a reality of violence, corruption and the threat of kidnapping since oil was discovered here 55 years ago.

Oil companies drill 2.5 million barrels a day but local militants are vandalising pipelines and stealing 400,000 barrels each day, forcing companies to consider packing up their operations. "The cost of doing business in this country is pretty high as a result of the insecurity,” said security consultant Chika Nwaozuzu.“I don't think it's a very good thing for us as a nation because we need them (oil companies)."

As chairman of Slok Holding, the leading player in Nigeria's oil and gas industry, Orji Kalu knows that the threats of piracy and kidnapping can frighten away multinationals. "The pirates and other related things are stopping foreign direct investment and they are becoming a problem,” he said. “All the major oil companies are not doing anything presently. They are just watching."

A new Petroleum Industry Bill, which aims to ensure oil companies invest in their immediate environment, has yet to be passed after being debated in parliament for four years. There is also a risk of oil companies pulling out as they are uncertain about the security and the safety of their operations, said Auwul Rafsanjani, executive director of the Civil Society Legislative Advocacy Centre.

But not everyone is convinced that the oil industry is on the brink of collapse - economists remain confident that oil companies will not divest.

"If insecurity and other forms of instability, unstable environment, were to rise, that would raise costs and therefore reduces their profit. But the profit margin for now, I believe, is such that we are not at the point where we really run the risk of capital flight, particularly from the extractive industry, and particularly from the oil and gas sector," said Dr Peter Ozo-Esan, an economist.

But as growing numbers of foreign workers are being kidnapped, multinationals are starting to realise that in Nigeria, corruption runs almost as deep as its oil reserves. As the Nigerian government tries to attract direct foreign investment, internal insecurity and popular unrest undermine its potential as Africa's economic powerhouse.


Former President of the Senate, Dr. Iyorchia Ayu, has examined the current spate of insurgency in the North Eastern part of Nigeria, postulating that vested interests in the crude oil exploration in the Chad Basin is oiling the machinery of Boko Haram and its attacks on the country.

Delivering the 5th Convocation lecture of the Adekunle Ajasin University, Akungba Akoko on Wednesday, Dr. Ayu, speaking on the topic, The Break Up of Nigeria, Myths, Realities and Implications, argued that Boko Haram is not a religious sect per se, because it has no clear or coherent message.

“They (Boko Haram) indiscriminately attack Christians, ‘Western Institutions’ such as schools, and Muslims alike.

“It is made up of Nigerians and a large number of Chadians from the Chadian provinces of Lac and Hadjer Lamis.

“These two Chadian states share a long border with North-Eastern Nigeria around the Lake Chad region, and provide Boko Haram with trained Chadian fighters.”

Ayu believes that the oil wealth beneath the Chad Basin in which some Nigerians and Chadians have made investments is fanning the embers of insurgency in the country.

“First, and most important, is that the Lake Chad Basin is estimated to have a reserve of 2.32billion barrels of oil, and 14.65trillion cubic feet of natural gas. The oil and gas flows underground across the countries sharing the Lake Chad Basin, Nigeria, Chad, Niger and Cameroun.

“Using 3D drilling, it is believed that Chad is not only tapping oil within its territory, but also from Nigeira to push up its production levels.

“The Boko Haram insurgency delays exploration and production on the Nigerian side of Lake Chad to the benefit of Chad and a few other stakeholders.

“Reportedly, prominent businessmen and politicians in both Nigeria and Chad, in association with French companies, have invested heavily in the Chadian oil industry, and as a result, benefit from Boko Haram’s destabilisation of the North-Eastern part of Nigeria.

“It is widely believed that it is they who are the principal financiers and arm suppliers to Boko Haram,” Ayu argued.

The former Minister of Education, Internal Affairs and Youth Development at different times, also noted that the drying up of the lake once the largest water body in Africa was affecting the economic and social life of over 30 million people in the four countries around the lake.

He said the development had resulted in the migration of many farmers and herdsmen as well as sprouting local conflicts between Camerounian and Nigerian nationals and between occupational groups fishermen fighting farmers and herdsmen to stop diverting water from the lake to their farms and livestock.

“Related to the insurgency, the disappearance of the lake and related rivers and the dislocation of the ecology and economic life of the region has created a large population of unemployed and discontented youth.

“They have become a reserve army easily available for recruitment by the insurgents. Curious enough, the President of Chad, Idris Debby, is said to have close, cordial relations with the insurgents. So far, Boko Haram has not attacked any territory in Chad. Rather, they have cluster of bases in Chad, which serve as rear for their terrorists activities in Nigeria,” Ayu said.



In the past four months, there has been a sustained decline in the prices of crude oil in the global markets. The price of Bonny Light crude (Nigeria’s high quality benchmark crude) has dropped from $114.60 in June to $86.95 as at October 31, 2014 (CBN, 2014), representing a 24.13% decline in just four months!

Among the key factors responsible for this trend is the increasing level of output in the U.S – a major importer and player in the global energy market. With current domestic production level of about 8.5million barrels every day (that is a 50% increase - or roughly 3 million barrels per day – compared to 2011), the US crude oil output is hitting its highest in three decades, and is even projected to hit over 9.7million barrels per day by 2017.

Weak demand from China whose economy is also experiencing slowing growth rate is another factor to the falling crude oil prices. And quite paradoxically, the geo-political unrests in the Middle East have also resulted in abundance of oil in the world market. In order to be able to fund its public friendly budget, the Kingdom of Saudi Arabia has recently indicated it has no plans to reduce production and supply despite concerns expressed by OPEC. Surely, other OPEC producers are likely to follow the Kingdom’s lead.

Consequently, except for strong adjustments which may occur in the US due to the possible production cut in its shale oil due to its very costly operational requirements – making it unprofitable in the face of falling prices – and except also OPEC plays a strong leadership role in managing production and/or supply from its member nations, the trend of falling prices may last in the short to medium terms.

Therefore, with crude oil exports constituting over 70 percent of Nigeria’s total government revenue and over 90 percent of the nation’s foreign exchange earnings, there is no doubt that the falling crude oil prices in the global oil market portends a clear and present danger to the Nigerian economy – both on the monetary and fiscal policy fronts – in the short-medium term.

I have read or listened to a number of assuring comments by the Nigerian government – especially from the Minister of Finance and the Co-ordinating Minister of the Economy, Dr. Okonjo Iweala – to the effect that Nigeria has alternative ways or assets with which we can handle the problem; and I have wondered what these other ways are except by going deeper into public debt undertakings. Or do we also intend to embark on some form of asset stripping?

When I read the assurances made recently by the Honourable Minister of National Planning, Abubakar Sulaiman, after presenting a paper on “National Planning and Vision 20:2020: An Assessment” at the National Defence College, Abuja, I began to sense that our government is beginning to tow the line of self-deceit. According to the Minister (as reported by a reputable National Daily), the fall in the price of oil would not negatively affect the economy. He was also reported to have said that: “All we need do is just to explore other areas. The Customs have surpassed their target, the same with Federal Inland Revenue Service (FIRS). We need to block all loopholes which is what we are doing now as a government. We can do without oil to survive because there are nations, which do not have oil and are pretty surviving. So, what are we talking?”, he queried.

While the government has the right to make assurances to its citizens in the face of an impending economy crisis, it would amount to self-delusion, grand deception, and wishful thinking to contemplate that our economy is safe in the face of the dwindling oil prices, especially considering Nigeria’s over-dependence on the energy sector. Even without the oil price decline, there are already serious strains on our economic indicators, which we have had enough trouble battling with.

The nation’s external reserves had depleted from $43.61billion as at December 31st 2013 to $36.70billion as at June 04, 2014 – representing a $6.91billion or 15.84% depletion in just five months prior to the oil price fall. This could have been a result of the subsisting hard battle to defend the value of the nation’s currency against global currencies, especially the US Dollar, the Euro, and the British Pounds Sterling. While inflation had maintained a single digit position, domestic demand had remained suppressed – seeming like the cause and consequence of the single digit achievement.

Fiscal challenges had persisted making the national government take foreign loans to support important expenditure items (fiscal and re-current expenditures inclusive). Unemployment rate has remained above 30% in 2014 (with youth unemployment hovering around 70-80%). Extreme poverty has persisted in Nigeria with over 45% of its citizens reported to live below $1.25 a day (World Bank, 2014).

Though economic growth rate has remained impressive at above 6.0% - making Nigeria one of the 10 fastest growing economies in the world, the growth has been less than inclusive, and has not yielded much prosperity in the lives of the individual citizens; termed jobless growth due to its inability to generate jobs for the labour force. This is largely due to the mono-cultural and unbalanced structure of the economy.

There is every reason, therefore, for a well-informed citizen to be worried about the realities faced by the Nigerian economy in the face of the current dwindling oil prices. Just in two weeks between October 15, 2014 and October 29, 2014, the nation’s external reserves lost about 1.8% of its value from $39.47billion to $38.76billion with the trend expected to continue. This will ultimately affect the nation’s ability to continue to defend the value of its currency, and also tighten our balance of payment position. One would expect an ultimate (imminent) return to a net-importer or negative balance of payment position.

On the fiscal front, the nation’s struggle with fiscal deficit positions would clearly worsen. Prior to the fall in prices, Nigeria used to sell a barrel of its crude oil at above $110 against the budget benchmark of $77.5 per barrel; but volume of export which has averaged about 1.8million barrels per day had remained well below the budget estimate of 2.39million barrels per day – offsetting the gains made in higher prices. But with the fall in prices, the low level export quantity (below benchmark) and low prices (nearing budget benchmark) would definitely result in inadequate revenue to fund the nation’s budget!



Nigeria's oil and gas industry has recorded another major milestone as Shell’s deepwater subsidiary in Nigeria, Shell Nigeria Exploration and Production Company Limited (SNEPCo), on Wednesday unveiled plans to drill eight more wells in the Bonga deepwater oilfield to help maximise deepwater production off the Nigerian coast.

This feat is coming barely two months after the oil giant started oil production from the first well at the Bonga North-west deepwater development.

In 2005, oil and gas production began in the 200,000 barrels per day Bonga field, Nigeria’s first deepwater development in water depths of over 1,000 metres.

The Bonga North-west, which achieved first oil two months ago, was a significant step forward for the Bonga project.

Oil from the Bonga North-west subsea facilities is transported by a new undersea pipeline to the existing Bonga Floating Production, Storage and Offloading (FPSO) export facility.

This third phase of the Bonga Main development is expected to add about 40,000 barrels of oil equivalent per day through the existing Bonga FPSO facility.

Shell’s Vice-President for Nigeria and Gabon, Mr. Markus Droll, said in a statement yesterday that this third phase is part of the efforts of the oil giant to demonstrate its commitment to Nigeria.

“This programme – on top of the ongoing Phase 2 drilling and after the start up of Bonga North-west barely two months ago – further underlines our commitment to Nigeria and leadership in deepwater production,” he said.

Shell’s Corporate Media Relations Manager, Mr. Precious Okolobo, also confirmed that Phase 3 is an expansion of the existing
Bonga Main development and would involve drilling four oil-producing and four water-injection wells.

According to him, drilling is expected to start in 2015, while output from the new wells would be transported through existing pipelines to the FPSO facility.

Okolobo said the facility has the capacity to produce more than 200,000 barrels of oil and 150 million standard cubic feet of gas a day.

“The Phase 3 work will be executed by several contractors including Nigerian companies that have developed deepwater expertise through the provision of similar services for SNEPCo.
Bonga has produced over 500 million barrels of oil to date,” he said.

Bonga FPSO had earlier been upgraded to handle the additional oil flow from Bonga North-west.

Under the Phase 2 programme, four oil-producing wells and two water-injection wells in the Bonga North-west development were connected to the FPSO, from where oil is loaded into tankers for shipping around the world.

The Bonga project is operated by SNEPCo as contractor under a production sharing contract (PSC) with the Nigerian National Petroleum Corporation (NNPC), which holds the lease for OML 118, in which the Bonga field is located.
SNEPCo holds a 55 per cent contractor interest in OML 118. The other co-venturers are Esso Exploration and Production Nigeria Ltd (20 per cent), Total E&P Nigeria Ltd (12.5 per cent) and Nigerian Agip Exploration Ltd (12.5 per cent).

It was gathered that under the Bonga North-west project, a number of new production manifolds, subsea umbilical systems, oil production and water injection flowlines and subsea tree systems were installed on the sea bed around 1,000 metres below the surface.

Also, a significant part of the project was said to have been carried out by Nigerian companies, including a local contractor that fabricated and installed the FPSO topsides.


News & Happenings / Is the National Assembly afraid of the PIB?
« on: November 06, 2014, 09:01:46 AM »
In the light of the present state of the country’s oil industry, the bill needs to be passed immediately to initiate the regulation and control of Nigeria’s most important industry, as it is definitely the roadmap for the future of our oil industry.

With less than one-year to the expiration of the tenure of the Nation’s seventh National Assembly, and three months to the 2015 elections, the question is; has the curtain finally been drawn against the Petroleum Industry Bill which is presently before the Senate and House of Representatives? Indeed, considering the present disposition of the Honourable Members who are neck-deep in political activities leading to the February 2015 elections, while legislative duties suffer, it seems the PIB bill may not be given attention before the year runs out.

This scenario is quite unfortunate as the PIB bill is expected to provide opportunity to restructure and reform the oil industry, which has become chaotic. While a segment of Nigerians may have some reasons to differ with certain aspects of the PIB bill, there is however a general consensus that the petroleum and gas sector in Nigeria certainly requires a drastic reform to redeem the sector from its present situation. Obviously, the country as the fifth largest producer of oil has been disappointing with managing its most important natural resource. Certainly, the absence of a strong regulatory process in all aspects of the operation of the industry in form of inspection and jurisdictional based quality control has been the bane of the sector, giving it a black market appeal. Increasing security problems as a result of oil theft, coupled with pipeline vandalism and reported piracy on –going in the Gulf of Guinea have all added to the problems of the oil industry.

That the country’s federal legislative body is yet to have the bill passed definitely has implications for exploration activities in Nigeria. Only last week a release from the Pipelines and Product Marketing Company (PPMC) indicated that the Nation’s crude oil reserves have declined from 37.2 billion barrels in 2011 to 31.8 billion barrels as at October 2014. Also from 38.5 billion barrels in 2008, the Country’s oil reserves dropped to37.5billion barrels in 2010. According to the reports the reserves had further slumped to 37.2billion barrels in 2011.The thinking among industry experts is that further delay of the passage of the bill would imply that the loss to the oil sector may exceed $125 billion by 2015 when serious deliberations on the bill are likely to commence. It is believed that government business may face a turbulence which may impact negatively on the economy of the country which depends mostly on oil proceeds to finance its budget.

Therefore, we believe that it would be in the interest of Nigeria if both Federal Houses pass the PIB bill. In the light of the present state of the country’s oil industry, the bill needs to be passed immediately to initiate the regulation and control of Nigeria’s most important industry, as it is definitely the roadmap for the future of our oil industry. The leadership of the National Assembly would certainly be etching their names in gold if they do it now.


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